Larry Levitt, MPP1 Author
Affiliations | Article
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Every
Democratic presidential debate so far has featured a slugfest among the
candidates over the question of building on the Affordable Care Act (ACA) by
adding a public option vs scrapping the current insurance system in favor of
Medicare for all.
This is,
to be sure, an important question with big consequences for people in the
United States who have health coverage, the affordability of health care, and
the revenues physicians and hospitals receive. But this debate has consumed a
lot of oxygen, leaving little for other health care issues.
For
example, the Democratic candidates have spent little time talking about
President Trump’s support for a lawsuit that would overturn the ACA,
including protections for people with preexisting conditions. There also has
not been nearly as much discussion of lowering prescription drug prices, which
is a top priority for the public.
Not
Much Daylight Between Democratic Candidates
Presidential
primaries tend to magnify differences among candidates, who are jockeying to
differentiate themselves. On prescription drug prices, there is not a lot of
daylight between the leading candidates—they all support allowing the federal government
to negotiate drug prices. Right now, under the legislation that created the
Medicare drug benefit enacted in 2003, the federal government is prohibited
from negotiating drug prices, leaving that to individual private insurance
plans. One result of that legislation is that the United States has drug prices that are much higher than in
other countries.
The
positions of the Democratic presidential candidates are aligned with a sweeping bill that recently passed the
House of Representatives, which would allow the federal government to negotiate
prices for at least 50 and up to 250 drugs each year, not only for Medicare but
also on behalf of private insurance plans sold to employers and individuals.
Drug prices would be capped at 120% of those charged in other high-income
countries. Drug companies that refuse to negotiate would face steep financial
penalties (which is what would give the government leverage to get price
concessions). The Congressional Budget Office (CBO) estimates that governmental negotiation of
prices would save the federal government about a half trillion dollars over the
next decade.
Talk
but Little Action Yet From Trump Administration
President
Trump has said he would veto the House-passed bill. He has
instead indicated support for a bipartisan bill from the Senate Finance
Committee, which has not yet come up for a vote and it is unclear if that bill
has enough support to pass. The Senate bill does not give the government
authority to negotiate drug prices, taking the significantly more modest step of
penalizing drug companies that hike prices faster than inflation (a similar
provision that is also in the House bill). Passage of major legislation is
uncommon during an election year, and in this case the parties seem far apart,
making progress even less likely.
President
Trump has talked a lot about drug prices, but as yet cannot point to much in
the way of action. The 1 tangible step the president has taken is a requirement
for drug companies to disclose list prices in television advertisements, but
that rule is tied up in the courts and has yet to go into effect. The president
had proposed a far-reaching plan to ban rebates paid by drug manufacturers to
insurers and pharmacy benefit managers, but later withdrew the proposal
after government actuaries said it would increase
federal government spending and premiums paid by those aged 65 years or older.
The president also took credit for the recent slowdown in drug
pricing increases, though how much he had to do with that slowdown is unclear.
Recently,
President Trump issued proposed guidance that would allow states to create
mechanisms to import cheaper drugs from Canada. Of course, the reason drugs are
less expensive in Canada is because the Canadian government regulates the prices, so what the president
has proposed is effectively importing price controls.
Proposals
to address drug prices—including requiring the disclosure of list prices in
advertisements, allowing the federal government to negotiate prices, and
permitting the importation of lower-priced drugs from Canada—all attract strong, bipartisan support of
three-quarters of the public or more.
As
Always, There Are Trade-offs
Not
surprisingly, the drug industry vigorously opposes these measures, arguing that
they would harm innovation. There are certainly trade-offs inherent in any
effort to drive down drug prices. For example, the CBO projected that under the House-passed bill,
there would be about 8 fewer drugs introduced over the next decade and about 30
fewer drugs introduced during the decade after that (out of an expected 300 new
drugs over a 10-year period). What is not clear is how many of these foregone
medications would represent true innovations rather than drugs that offer
minimal clinical benefit over currently available options.
Individuals
in the United States fill an average of 11.6 retail prescriptions per person per
year, so the way people most frequently interact with the health care system is
at the pharmacy counter, making drug costs a salient issue for voters. Three in
10 adults say they have not taken a medication as prescribed during
the past year due to the cost.
Some 54% of the public disapproves of the
way President Trump is handling the cost of prescription drugs prices compared
with 30% who approve. We could see more proposals from the president this year
as he tries to reverse public perceptions.
Big
Debate on Drug Prices in 2021?
The
dominance of Medicare for all vs a public option in the health care debates
among Democrats so far suggests one of those ideas could be a signature issue
for a Democratic president in 2021 if the party sweeps the election this fall.
That is certainly possible. But do not be surprised if drug prices—an issue
with broad, bipartisan appeal among voters—instead becomes a marquee issue for
Democrats.
Article
Information
Corresponding
Author: Larry Levitt, MPP, Henry J. Kaiser Family Foundation, 185
Berry St, Ste 2000, San Francisco, CA 94107 (larryl@kff.org).
Conflict
of Interest Disclosures: None reported.
February
7, 2020
Next
Big Health Care Debate
Lawrence
Danto, MD, FACS | UCDavis, Michigan Medicine
A long
over due debate for sure . The price of drugs in the US is unconscionable. But
more than the debate: Patient oriented action is long over due.
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